Britain

Marriage tax breaks

Ed Balls gets it right, for once

HERE’S an idea. Children are, the data overwhelmingly proves, better off in households who own ponies than in those who don’t. They do better at school, grow up to earn higher incomes, live longer lives and generally suffer less*. When they grow up, they are more likely to own ponies themselves, and so perpetuate the virtuous cycle. Obviously then the state ought to subsidise ponies, to extend the benefits of the institution of pony-owning to as wide a section of society as possible.

A joke. Most people would not accept that ponies have such wonderful effects on children (though your correspondent can name at least one who fervently believes it). The point is that pony ownership is one of those things that is highly correlated with wealth, which in turn is correlated with children doing well at school. That doesn’t mean that ponies are the cause. Wealth is the cause, together with a thousand other smaller things that go with it—possibly including, in a tiny way, pony-ownership. Similarly, it is extremely clear that on average, children do better when their parents are married. What is not so clear is how much the institution of marriage actually has to do with it.

This debate matters because government—or at least its Conservative main part—is extremely keen to promote marriage—and it plans to introduce a tax break worth around £200 to some married couples to do so, as a total cost of some £600m. Today, Ed Balls, the shadow chancellor, has pledged that he will scrap the tax break if Labour wins the election, prompting a furious reactionfrom the right. They argue that their tax break will help encourage stable families, reducing benefit dependency and helping children. Mr Balls says that the tax break is “perverse and unfair”. He is absolutely right.

For all that Conservatives promote the role of their tax break in helping children, according to the 2011 census, just 37% of married couples have dependent children. There are a bunch of other practical problems—for example, dual income earners are unlikely to benefit, ruling out a load more children. But let’s put that aside. The key question is whether marriage itself actually helps anything—that is, as opposed to cohabitation.

The evidence seems to suggest not. For example, only one major study tried to account for the selection effects of marriage, and this showed that “once observable and unobservable differences between married and cohabiting parents in Sweden are taken into account, marriages (at least those by parents responding to financial incentives) provide no educational advantage to children”.

What really matters is first, how—or indeed whether—we should try to encourage two-parent families and second, whether we should try to improve the circumstances of single parenthood. Last year, 36% of lone parent households were workless, against just 5% of two parent households. To make up for the income costs of that, we rely heavily on the welfare system, which costs a lot of money and creates a lot of resentment. If more couples stayed together, that would be an improvement.

But how much can we realistically do? The reality is, we live in a world where people divorce and relationships don’t always last. Relatively few people plan to raise children alone; it just happens. If they are middle-class, they can usually rely on some sort of support from the absent parent, but even then it is tough. If money is tight, it is tougher still. How would those people feel about tax breaks which in effect penalise them in favour of people who are doing quite well already?

Perhaps the liberal thing to do would be to stop trying to influence people’s private lives and start trying to ensure that people can do the best thing for their children whatever the circumstances they end up in. Since 1997, the proportion of lone parents living in workless households has fallen from 51% to 36%: that is a significant victory, far outweighing any of the likely benefits of the marriage tax break. That is at best an enormous sideshow—moralising through public money. A tax break for ponies would be about as justified.

*NB: For the purposes of this blog post, your correspondent has not actually checked that any of this is true, but he is pretty sure that it is.

I strongly object to your statement that the suggestion the UK government should subsidize ponies is "a joke." This is an excellent suggestion. It would be good for everyone and good for the economy.

And by a stroke of good fortune I just happen to own and operate the country's largest pony farm. I look forward to this excellent policy being implemented for the good of all at the earliest possible opportunity.

Interesting point about whether or not we should be encouraging 1 vs 2 parent households. If two turn out to be better/easier than one, why not research in to the benefit of multiparent units?
Children raised by 3,4,5, or more adults would surely have immense benefits in terms of pooling resources, time, experience, and it would mean that if one adult was having difficulties, there would always be others on hand to take over.
Such children would have excellent opportunites and more exposure to wide social circles.
Perhaps friend groups or extended familes sharing raising children would be a better way.

The Saxons and Scandinavians, with wide social support, with far less malnutrition than peasant societies and with strong community bonds, were far more easily able to support warriors, expeditions and colonization - hence the English language and the role of Scandinavian & Germanic tribes in founding cities throughout Slavic Eastern Europe.

The trouble was, when the black death struck Europe, all multifamily communities were decimated. Scandinavia and Northern Germany were struck especially harshly.

Old people hold far too much (big government, authoritarian-inclined) nefarious sway over the UK; and especially over the Conservative Party. We need some genuine small government liberalism: leaner bureaucracy, more human freedom, pro-market reform and European market integration.

The family is an end, D.K... People work to achieve nice homes... family, marriage, relationships, children... And they are being systemically blocked by the corporate/feminist crowd who want women in the workforce... That's the reality of the situation... Let's address that issue
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Nice homes require dedicated homemakers... and breadwinners with well-paid jobs... Breadwinner & Homemaker make a natural team... With their dependents, they constitute the 'nuclear family'... the basis of middle-class society... Anathema to the corporate crowd
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Which middle-class family is being trashed... We collectively as a society are putting our resources behind working couples... subsidised daycare for example... when we should be putting our resources behind single-income couples
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I always advocate a Homemaker Allowance... Child and Family benefits and tax breaks would then be linked to homemakers in single-income households... Single parents might qualify as homemakers... But working couples would NOT qualify for any public support... Working spouses could even be disqualified from survivors' pensions
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That is how to help the family

The bad drives out the good... Gresham's Law... So bad families... i.e working couples... drive out the good... i.e single-income couples... Does that communicate?
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Once two-income households are admitted, single-income households become unviable... When the wife's income was added to the man's for mortgage purposes (to take the obvious example) the price of housing shot up... And a second income became a necessity... Single-income families were discredited... And future generations disinherited
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That's the main consideration
*Married or cohabiting
*Fecund or childless
*Rich or Poor
*Straight or gay
These are not primary considerations
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A Homemaker Allowance helps the family by separating the good from the bad

I wonder if anyone has done a study of the reasons that people end up with children in single parent families. And then think about which of those reasons might have an obvious causal connection to the things which correlate with single parent families.
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It ought to be possible to get broad support. Conservatives would be happy to know what issues to deal with to get more marriages, which they favor. And liberals would be happy to have evidence on what issues really lie behind differential educational outcomes.

At present the welfare system encourages idleness (with a hefty marginal rate of tax for anyone taking on a job - something I'm sure TE would understand), increasing family size (getting pushed up the housing list for a bigger council house as well as more benefits). Whats more the welfare system considers married couples as a unit when it suits (to penalise) them. It is married couples who are financially penalised by the current system.

Ideally the whole system would be simplified and it's 'perverse and unfair' distortions removed. But a married couples allowance is merely redressing an existing imbalance.